Export or perish
Haven’t we heard this cry before, in the 1980s when Lalith Athulathmudali was Trade Minister and Sri Lanka had just woken up from a period of deep slumber (1970-1977) when restrictions were the order of the day?
Sri Lanka cannot also lay claim to the expression “export or perish” as it was a slogan first coined by Indian Prime Minister Jawaharlal Nehru in the early 1960s and was meant to imply that if a nation doesn’t increase its exports, it will perish or face economic ruin.
These thoughts came to our mind while reading an interview with Sri Lanka Tea Board Chairman Rohan Pethiyagoda (See Page 1) on how the bureaucracy is slowing down exports, making you wonder whether Sri Lanka will ever get it right -- in whatever administration.
Pethiyagoda, who has no need to stick by decorum like most staid public officials who are reluctant to raise objections not because they do not want to but often because their pensions could be on the line, finds comfort in the fact that the President has also alluded to the slow bureaucracy and instructed officials to ignore ARs and FRs in speeding up flood relief work.
As a suggestion, maybe the President should steer a discussion on how to fast-track government processes, regulations and tender proclamations and come up with a new set of rules relevant to the new age. On the flip-side, the arrogance of a few powerful officials in the former regime in discarding government regulations in project formulation and implementation led to corruption in the process while only on a few occasions, which was necessary at the time, absolute power was used to override the bureaucracy to speed up disbursements in managing disasters. During Sri Lanka’s latest natural disaster, Treasury officials were slow in allocating money fearing that any attempt to disburse cash outside strict financial regulations would put them in line for a ‘day with the Financial Crimes Investigation Division-FCID’ in a future government. With several state officials being hauled up before the FCID in connection with work during the former regime, the bureaucracy has been slow, with officials ensuring all tracks are covered in basic government processes.
Sometimes mundane state acquisitions (ordering equipment for a canteen) or inviting applications for vacant positions (even a peon or a secretary) are done through large advertisements in the media to abide by regulations. The process is not only time-wasting but also costly with a transparency over-kill.
Bureaucracy is slowing down progress, while the country wants to relentlessly increase exports and foreign investment, both of which have been challenging issues. Exports have been very slow despite the end of the war with earnings last year at US$10.3 billion against imports costing $19.4 billion (balance of trade -- $9 billion) while 10 years ago (during war-time 2006) export earnings were $6.8 billion versus $8.8 billion of import cost (trade balance – $2.2 billion).
So why haven’t exports taken off ? Reliance on traditional agri-based exports (tea, rubber and coconut) hasn’t paid off with their percentage of total exports gradually falling to 16.1 per cent in 2016 from 20.3 per cent in 2008 and more than half of the total exports, many decades ago. Garments have taken over as the largest value added export earner, while worker remittances are topping the list ($7.2 billion in 2016). With tourism taking off at the end of the war, earnings from this sector have rapidly risen with revenue soaring to $3.5 billion last year against $576 million in 2010.
While there is a lot of talk and discussion in government circles, private sector forums and conferences on the need to increase exports and reduce the trade deficit, for exports to take off facilitation must be smooth which, at the moment, is anything but smooth taking the Tea Board issues as one example. In such a scenario, seeking to propel export growth without tackling some real bureaucratic issues, is like putting the cart before the horse.
In the same context, one may ask: What are Sri Lanka’s trade officers in missions abroad doing to promote exports? During a 2003 visit to the Sri Lankan embassy in China by an exporter, the trade attache was found running from room to room looking for a printer. Hopefully, this situation may have improved by now but how do you promote exports if such basics are not taken care of ?
On the other hand, these trade officers have done little (or so it appears) to, not only create markets for Sri Lankan products but also look for different high-end and niche market segments for local products. Sri Lanka’s tech industry has been very progressive with chips and other tiny items being sold to world-class producers but such advances have been on their own initiatives, not with any state patronage. Sri Lankan company Lanka Harness provides airbags and seatbelts for companies like Toyota, Hyundai and Chrysler. At an interactive session with a local university last year, Lanka Harness founder Rohan Pallewatta opened his presentation, playing a guitar and singing a song about innovation, new ventures and stage fright!
Are our trade attaches able to, likewise, think differently, unconventionally and off the beaten track? For example the websites of Sri Lankan embassies contain stereotype information about trade and investment which today can be obtained from any source on the web. As we speak, government officials are talking of the lack of diversification of exports and vertical exports but are trade attaches progressive enough to move with the times and the need of the hour (reduce the trade balance)? Are they on the field, walking into markets, super stores and checking out a plethora of goods and products that Sri Lanka could also provide at a more competitive rate? Or are they sitting in cushy offices, collecting data and statistics instead of engaging in conversations that put Sri Lankan exports on a different platform?
On the other hand, there have been enough and more national plans or national policies on exports but often short term and designed to produce results – mostly increasing jobs not export diversification -- within the (5-6 year) tenure of a ruling party. A long-term strategy crafted by a joint public-private sector team (with more weightage on private-sector professionals) looking at new areas, removing any bottlenecks and bureaucratic hurdles may be one of the ways out of the export-or-perish dilemma. Another suggestion is to bring in expert input even to the point of hiring private-sector professionals to Sri Lankan missions on short 3-6 month assignments, charged with transforming trade sections to be progressive rather than reactive, data-collecting units. On the flipside, this might be too much to ask considering that one of the pleas at the Tea Board is to incentivize staff for weekend work, an issue that should have been sorted out years ago or over the counter!
Until and unless policymakers and planners think out of the box and the bureaucracy is energized to work at private sector pace, not with the Sword of Damocles hanging over their heads (FCID) and exports driven with the passion of a dynamo, Sri Lanka will continue to plod along with burgeoning trade deficits (despite what the prophets in any government would say or do).